The Importance of Speed in Precision Manufacturing Quotations

News/Update
July 17, 2023
The Importance of Speed in Precision Manufacturing Quotations

Introduction

In the fast-paced world of Precision (CNC, Injection Moulding, Vaccum Casting, and 3D printing) manufacturing, order win rate is a critical metric for successful businesses, though poorly understood and ignored by many. While accuracy is important in the quotation process, there is a growing recognition that in some cases, a rough "ballpark" estimate is more effective in winning orders than a painstakingly precise quotation. This article explores the more traditional approach to providing quotations for precision manufacturing works, and discusses the potential drawbacks of this approach. We will also look at the benefits of using estimated quotations, and how this approach can help companies to win more orders and stay ahead in an increasingly competitive industry.

What exactly is “Order Win Rate”?

In simple terms, "order win rate" refers to the number of orders won as a percentage of the total number of quotes provided. In other words, a higher order win rate means that a company is more successful in convincing customers to choose their products or services. In an industry that is highly competitive and constantly evolving like 3D manufacturing, it is important for companies to find ways to increase their order win rate and stay ahead of the game. Many companies use advanced tools (like CAD, Zoho etc.) which help them visualize and better estimate the needs of the client and their own costs.

The traditional approach

It is fairly common for companies to prepare detailed and precise quotations for potential customers. Customer reaches out to the manufacturer with a request via an online or offline portal, and then these follow a pretty standard process. It typically involves gathering all the necessary information about the customer's requirements, such as the specific materials, dimensions, and quantities needed, and using this information to calculate the total cost of the project. They use CAD to visualize, then use excel to tally the costs, and finally use something like a Zoho to generate a quotation. The quotation will then be presented to the customer, along with any relevant terms and conditions. Exactness is important in this process, as it helps to ensure that the customer has a clear understanding of what they can expect from the final product, and that there are no misunderstandings or miscommunications that could lead to problems down the line.This process typically takes about half a day of dedicated work with multiple people involved in generating the quote, as each software requires expertise. (Learn about how Phasio automates this here)

The Drawbacks of traditional approach

The traditional approach to preparing precise quotations has several potential drawbacks though, particularly when multiple manufacturers are competing for the same contract. Firstly, the time and effort required to gather all the necessary information and calculate the costs accurately can be significant, particularly for larger, more complex projects. This can be frustrating for customers who are looking for a quick response, and may lead them to choose a competitor who is able to provide a quotation more quickly. Additionally, the time and effort required to prepare a precise quotation can impact a company's efficiency and productivity, potentially leading to a lower order win rate. Most companies typically respond to 20-25 orders in a day, and win about 10 of those orders. In a fast-paced and competitive industry, the ability to respond quickly to customer enquiries and requests for quotations can be a key differentiator, and companies that are able to do so are more likely to win orders and succeed in the market.

The benefits of using approximate quotations

In contrast to the precise quotations approach, a quick approximate or estimated quotation can be more effective in winning orders in the manufacturing industry. A guesstimate quotation is a rough estimate of the cost of a project, based on a general understanding of the customer's requirements. It is not as detailed or precise as a traditional quotation, but it can be generated much more quickly, often within a matter of minutes. This fast turnaround can be a major advantage for companies prioritising to win orders, as it allows them to respond to enquiries and requests for quotations more promptly, and can help to build trust and credibility with customers. In addition, approximate quotations can help companies to stand out from their competitors, who may be slower to respond or may not offer this option at all. Overall, the benefits of using estimate quotations in Precision manufacturing can be significant, and can contribute to an increase in order win rate.

Increased efficiency, and higher profits

In addition to the benefits of speed and increased chances of winning orders, using estimated quotations can also result in higher profits. This is because the time and effort required to prepare a precise quotation can be significant, and can eat into a company's resources and profitability. By providing a quick estimate instead, companies can save time and reduce their overhead costs, leaving more room for profit. In addition, the use of estimations can help companies to secure orders that they might otherwise have missed out on due to the time required to prepare a precise quotation.

Furthermore, if machines are able to run at a higher percentage of capacity, it can help to reduce costs for the company by increasing efficiency and maximising the use of resources. Overall, the ability to provide fast responses to customer enquiries can be a key driver of success and profitability in the Precision manufacturing industry.

How to generate estimated quotes quickly? (or how to improve my estimations)

In our next article we will talk about how to automate 3D printing quotes.

In conclusion, while accuracy and exactness are often valued in the Precision manufacturing industry, it is not always necessary or even desirable in the quotation process. In some cases, a quick and rough estimate can be more effective in winning orders, particularly when speed is a key factor. Fast responses to customer enquiries and requests for quotations help companies increase their chances of success and build familiarity, trust, and credibility with their clients. While estimated quotations may not be suitable for all projects, they can be a valuable tool in the right circumstances, and can help companies to stand out from their competitors. Ultimately, the key to success in this industry is finding the right balance between precision and speed, and using the right approach to quotations for each individual situation.

3D Printing
Additive Manufacturing
Industry 4 0
Manufacturing
CAD Design
Software
Vacuum Casting
Manufacturing Software